Managing assembly processes is no simple task and complexity brings risk.
In the video above, ENGINEERING.com’s Jim Anderton speaks with Terri Hiskey, VP of product marketing for manufacturing applications at Epicor, about how Enterprise Resource Planning (ERP) can increase production efficiency and help manufacturers save time and money. A transcript of the full interview appears below.
Jim Anderton: For our manufacturing audience who are not familiar with ERP, give us a brief definition – What is ERP?
Terri Hiskey: A lot of people think of it as the heart of the company, or the backbone of the company, because it really manages all the backend processes that perhaps manufactures don’t see day-to-day. Accounting processes, billing, accounts payable, accounts receivable, the general ledger; its really keeping track of what’s coming into the company and what’s going out, and true costs related to production and things like that.
It’s really the foundation of the company, which other enterprise systems can connect to and exchange information. Frankly, that’s where companies get the most efficiency, when they have these connected processes.
For example, with an MES system managing manufacturing execution, ERP can help you understand what the impact of something like new orders coming in is going to be on your manufacturing system. Having that seamless integration can really help make your processes more efficient and more productive.
ERP also connects to other enterprise systems, such as customer relationship management, human capital management and sometimes even product life cycle management. So, it’s really the core that collects all the information to make the manufacturing process seamless from the time that you get the beginning of an idea out through to delivery.
JA: Are manufacturing engineers and managers more involved in the front office functions you’re talking about with ERP?
TH: I don’t think they need to be if you have a good integration, so that they can access the information that they need for their manufacturing systems. But it’s important for whoever is managing the bottom line of that process: the profit.
They need to know about these parts: How much are these parts costing? Are they up to the quality that you need? If not, where are you getting these other parts and how does that affect the price that you put on your product at the end?
I understand that manufacturers are just concentrating on getting a product out, but the people that really care about the information that goes in and out of ERP are the ones that are pricing these products, and they want to make sure that they’re priced properly as they go out to market—that you’re getting the profit margin you need.
Otherwise, how can you know what you’re true costs are and what you’re true profitability is? So, again, it’s really important to have that integration between these manufacturing processes and reporting back on the cost, the inventory and what’s going on with these systems.
Regardless if it’s a custom product or a mass product, I think it really comes down to costs and that’s ultimately what ERP is there to track.
JA: Can you comment on information flow going both directions from the assembly line to the front office and back?
TH: ERP is a very collaborative system. With proper accessibility, people can access the information they need to do their jobs, information that the folks from the other end—the accountants and people that care about the money—can also see. But all of this truly works better in a collaborative environment.
My background is in product lifecycle management, and we used to talk quite a lot about how, back in the day, products were almost designed in a silo and the product designers might designate certain parts and someone from purchasing might say, “This part is about 15 cents cheaper per unit. Is there a way we can do that?” Then there’s a long cycle of redesign.
The ideal situation is to have all of the systems connected, so your product design is connected somehow to your manufacturing—everybody should be in this collaborative situation—and then you bring ERP into it. if purchasing and procurement costs are tracked through your ERP system as well, maybe it’s good if they’re part of the design process as well. So, I think that ERP provides you with a way to connect all of these processes and collaborate on them throughout the processes instead of it being “I’m finished with my piece, I’m going to pass it to here.” You lose a lot of productivity and a lot of time with that kind of situation.
It’s better to have the seamless integration with ERP as the core of the system tracking these things and sending alerts back to the purchasing or design people in terms of “If you put this piece in, we’re going to have to bump up the unit per price by X amount because we originally scoped it out as this part but now this substitute part makes it more expensive.”
It’s good that you’re notified of these things as they come up, instead of having to do guesswork. I was also in manufacturing back in the day, when we used to say “I think it’s going to be about this much and if I price it about 20 percent more, we’ll make some margin.”
You don’t know what the true manufacturing cost is unless you’re tracking it from beginning to end.
JA: Can you use these tools to get a better handle on when to end-life a product or how to ramp a product up?
TH: Absolutely, and now that we’re in this age when you can start collecting information from the front end back from the consumers, and understand that, say, you’re not getting enough hits on your website for a certain product, you can start to collect analytics around product areas that are hot, or not.
Certainly, it can impact that—you can use these systems to understand buyer trends and after those products are out to market you can see how adoption is going or figure out why you’ve got all this inventory sitting in the warehouse. Those management systems can be connected back to your ERP as well. We’ve got inventory management connections, warehouse management connections, transportation management connections—all that information can get fed back into your ERP system so that you have visibility on your end-to-end process.
JA: Is there any risk of data overload, aggregating so much information you can’t processes it in a timely way?
TH: That’s a great question, because I think that’s what a lot of manufacturers are struggling with today. Going to some of these research conferences, I’ve seen statistics as high as 70 percent of data collected on the shop floor is left untouched because there are either no resources to process it or no understanding of how to process it.
That’s where we start to dive into a little bit of the Industrial Internet of Things or Industry 4.0 capabilities, making that data actionable. It’s not an easy process because it really takes a lot of looking inward at what you want to track and what you want to get from your analytics, instead of just using technology for its own sake and collecting data you don’t know what to do with.
You need to understand what it is you want to do and deploy these analytics in a smart way. You need to understand, for example, the capacity of a machine on the floor so that you can start tracking it and understanding when it’s optimal, when it’s starting to lag, when you need to service it, etc.
All of those things can be done now through sensors on the shop floor and mobile devices, so that you can be alerted if you’re in a different facility and understand that a machine in doesn’t seem to be performing to the standard it usually does. It’s a new age now on the manufacturing floor to be able to manage these things.
JA: How do you get the machines to talk to a plant-wide or enterprise-wide ERP system? Is that a challenge?
TH: It is a challenge. We’re all learning how to do this now, we’re all in this nascent infant stage of understanding. How you pull that data from a machine? How you analyze it to make it actionable? I think that that’s the key to it: you must understand what that data is, what it means to you and how you can act upon on it. Otherwise, you’re just collecting information to collect information.
There are integrations now that can connect this information and not only analyze it but suggest actions, then feed that back through an ERP system and get that information to the people who need it, who are the ones who make decisions on the shop floor.
JA: Is there a right or wrong way to implement an ERP system in a manufacturing operation?
TH: I would shy away from the “boiling the ocean” approach. I understand that manufacturing needs quick wins, especially in the small and mid-sized areas. We don’t have millions of dollars to invest in a complete system overhaul.
Where I’ve seen adoption happen and success happen is in small proof of concept projects to start. The most common place I’ve seen it in manufacturing is around the performance of assets and machines on the shop floor.
We just had a demo on our first day where somebody came on this stage and showed how easy it was to start on the path to the Internet of Things by purchasing a $60 sensor, placing it on a machine, syncing it to software and then deciding what the thresholds were: if the temperature was this way, or production is plus or minus a certain threshold, you automatically get an alert on your cell phone.
He did this in a matter of minutes.
That’s an easy way to dip your toe in the water and prove in your mind you’re getting how this works. There are packages out there where you can, for some entry level fee, pay for these pre-built software packages that connect to 15 sensors, for example. If you want more then you pay more, but they’re easy entry-level ways to understand how the technology works and get started.
Once you enact this on a small factory or factory line, understand the benefits and see the data that is extracted, that might even give you a better idea. For example, maybe you didn’t know you could track temperature plus or minus this degree. It could give you ideas about what’s trackable and metrics you need, almost as a pilot project.
Once you get that up and running and understand it, then maybe you expand. I don’t know that I’d go all in with the company-wide project that you really understand what you can get out of the technology.
JA: Are we looking at a future where we’ll tie this into an expert system that will actively control production processes? Can it go that far?
TH: I think so. I haven’t seen that enacted yet, but I think that’s the way it’s going. Otherwise, why collect all this data? You’re collecting all this data to understand things like the optimum temperatures for production. I think that ultimately that’s where we’re going and that’s what all this technology is starting to work up to, and I think the vision is there and that we can get there.
JA: Can it be made secure?
TH: it can be made as secure as your laptop can be made secure.
When I talk to manufacturers who want to implement an IoT strategy, I council them to consider security as much as they consider security on their laptops and enterprise systems. Figure out with IT and work with them to figure out how you’re going to protect the information that’s going to be fed from your data.
We’re already hearing of cases of hackers getting into automated processes and that’s because, frankly, maybe it was something we hadn’t thought about before. We’re a little naïve to it, but we’ve got to consider that these machines that we’re extracting data from are just like extended computers, so you have to protect them just like you protect your systems. That means perhaps more than just a password on your laptop. Whatever corporate security measures that are being taken need to apply to your equipment.
JA: If there was a single piece of advice you could give to someone considering ERP for the first time, what would that be?
TH: Don’t be apprehensive. Really, think about it as your friend.
ERP is not out to displace anyone and it’s not out to make the work life of a production supervisor more complicated. It’s there to do the opposite. While it may seem painful—and we know people who shudder at having to implement a big enterprise system of any category—in the end, when you get through the process, it will save you time. You will become more productive and be able to have better visibility on the shop floor.
The long-term benefits really outweigh whatever short-term pain you might feel.
JA: Don’t fear the ERP, says Epicor’s Terri Hiskey.
For more information, visit the Epicor website.